Innovation News

Washington D.C. – According to Babette Boliek of AEI, “ If you like lower taxes, using the Internet, and increased investment in broadband infrastructure, you’ll like what the House of Representatives just passed on Wednesday: an act that would permanently ban taxes on Internet access services. The Internet Tax Freedom Act (ITFA) bars state and local governments from placing taxes on Internet access and from imposing discriminatory Internet-only taxes, such as taxes on email services. In other words, this act prevents the list of access taxes you see on the bottom of your telephone bill from also being part of your Internet service provider’s bill.”

But do not confuse the tax relief provided by the ITFA with relief from Internet sales or use taxes – sales and access taxes are legally unrelated. This act does nothing to address the state taxes collected on Internet purchases, and, politically, that is exactly why this iteration of the ITFA might not pass the Senate. First enacted in 1998, the ITFA has been renewed several times and is currently set to expire in October 2015. This version, the Permanent ITFA (PITFA), would do what its name implies – make the law permanent. There are many reasons for such a bill. As California’s own Representative Anna Eshoo put it, “We want to encourage expanded broadband adoption. If you tax it, you’re going to shrink it.” Internet access taxes are not just any old taxes – they are high, and they fall disproportionately on low-income Internet users. As Rep. Bob Goodlatte (R-VA) warned in his floor statement, “The average tax rate on communications services in 2007 was 13.5%, more than twice the average rate on all other goods and services…To make matters worse, this tax is regressive: low-income households pay ten times as much in communications taxes as high-income households, as a share of income.” The evidence of such taxes being detrimental to the economy is so strong, and the popularity of the act so great, that the House acted with broad, bipartisan support to pass it.See more at: http://www.techpolicydaily.com/internet/internet-tax-freedom-act/?utm_source=newsletter&utm_medium=paramount&utm_campaign=cict#sthash.7apiVt8h.dpuf